COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION of Decision No 1025/2013/EU of the European Parliament and of the Council of 22 October 2013 providing macro-financial assistance to the Kyrgyz Republic
Date: 2019-12-17
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU aid, EU loan, Kyrgyzstan, economic reform, economic stabilisation, financial aid, macro-financial assistance

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 17.12.2019  SWD(2019) 448 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE EVALUATION of Decision No 1025/2013/EU of the European Parliament and of the Council of 22 October 2013 providing macro-financial assistance to the Kyrgyz Republic {SWD(2019) 446 final}  
 
 
The  Kyrgyz  economy  faced  pronounced  economic  difficulties  in  the  wake  of  the  global 
economic  crisis  of  2008  and  the  inter-ethnic  violence  of  2010.  In  response,  the  European 
Commission,  among  other  major  international  donors,  announced  the  mobilisation  of  EUR 
118  million  of  assistance  through  various  instruments,  as  well  as  a  EUR  30  million  Macro 
Financial  Assistance  (MFA)  operation.  The  MFA  was  disbursed  in  full,  in  two  instalments, 
over the period June 2015 and April 2016. It aimed to support the country address its balance 
of  payments  problem  as  well  as  implement  economic  and  structural  reforms  to  stabilise  its 
economy and enhance the sustainability of its external position. 

The  purpose  of  the  ex-post  evaluation  of  MFA  is  to  assess  the  relevance,  efficiency, 
effectiveness,  coherence,  and  EU  value  added  of  the  EU  intervention.  It  also  explores  the 
social impact of MFA and its effect on Kyrgyzstan’s public debt sustainability and sets out to 
draw lessons. The ex-post evaluation has been conducted by an external contractor and draws 
on  evidence  gathered  through  a  variety  of  quantitative  and  qualitative  research  techniques, 
including  desk  research,  interviews  and  a  focus  group  discussion  with  a  wide  range  of 
stakeholders,  as  well  as  a  validation  workshop  with  stakeholders  closely  involved  in  the 
design and implementation of the programme.  

The  evaluation  finds  that  the  design  of  the  MFA  operation,  both  in  terms  of  financing 
envelope  and  focus  of  reforms,  was  relevant  to  Kyrgyzstan's  economic  challenges  and 
coherent with EU priorities. MFA disbursements accounted for around 0.3% of Kyrgyzstan’s 
GDP in 2015 and 2016 respectively, and though delayed, were still relevant at the time.  

The EU’s added value was most apparent in reinforcing the promotion of structural reforms 
in several priority areas, including public finance management, financial sector, trade policy 
and  investment,  and  business  environment.  MFA  reforms  were  closely  aligned  to  and 
coherent  with  other  EU  support  programmes  (including  budget  support  programmes)  and 
those  set  by  other  donors,  including  the  IMF  and  the  WB.  This  reinforced  the  rationale  for 
adjustment  measures  and  provided  local  authorities  with  an  impetus  to  reform  swiftly  in 
targeted sectors. 

More broadly, the evaluation finds that MFA was effective in contributing to the stabilisation 
of  the  Kyrgyz  economy,  particularly  when  combined  with  the  IMF’s  support  programme, 
which it complemented. Due to its grant component and loans bearing long maturity and very 
low  interest  rates,  MFA  contributed  to  improving  Kyrgyzstan’s  public  debt  sustainability. 
More broadly, the impact of EU’s MFA and the IMF assistance could be seen through their 
positive impact in supporting economic recovery. 

Beyond  contributing  to  economic  stabilisation,  the  EU  MFA  served  important  political 
objectives in the Kyrgyzstan, whilst serving as a signal of EU support to democratic reforms 
in Central Asia. Furthermore, though the operation did not specifically target social reform, 
evidence  gathered  from  interviews  suggests  that  the  MFA  provided  the  EU  with  (added) 
leverage  to  prevent  the  enactment  of  contested  legislations,  notably  the  ‘anti-LGBTI’  and 
‘foreign agents’, which were ultimately not pursued for adoption in parliament.  

The  evaluation  confirms  that  the  MFA  operation  was  implemented  efficiently  and  in  close 
coordination  with  the  Kyrgyz’s  authorities,  the  IMF  and  the  World  Bank.  The  Kyrgyz 
authorities were swift and effective in the implementation of the conditionality, fulfilling all 
conditions, without the need for waivers. 

Overall therefore, the evaluation finds evidence that the EU MFA to Kyrgyzstan was relevant, 
coherent, effective and efficiently implemented. Nevertheless, the operation was characterised 

1 

 
 
by an exceptionally long timetable throughout the process, which may have hampered the EU 
added  value  and  the  visibility  surrounding  the  operation.  In  this  context,  with  the  aim  to 
improve  the  visibility  and  public  understanding  of  MFA  more  generally,  the  Commission 
started  in  mid-2014  to  publish  on  the  website  of  DG  ECFIN  the  Memorandum  of 
Understanding  that  lays  down  the  reform  measure  related  to  the  operations.  The  issues  of 
MFA  timelines  and  MFA  operational  visibility  will  be  further  examined  in  a  MFA  meta-
evaluation planned to commence in 2020. 

Nevertheless,  the  external  evaluation  confirms  that  despite  the  delays,  the  MFA  was  still 
relevant in 2015-2016 as disbursements coincided with important debt repayment obligations 
and with difficulties faced due to the unfolding Russian economic crisis. 

Looking ahead, the Commission will seek to put into practice the lessons learned, and further 
consider the identified limitations in the upcoming MFA meta-evaluation planned for 2020. 

2